The RBI has announced that to consolidate existing reporting frameworks for various types of foreign investment in India, it will introduce a Single Master Form (SMF) covering all available reports. The Reserve Bank is launching an online application, FIRMS (Foreign Investment Reporting and Management System), which will provide SMF. This article will discuss the registration of entity & business users in the FIRMS Portal of RBI.
Foreign Direct Investment (FDI) filing with Reserve Bank of India (RBI)
Foreign Direct Investment (FDI) filing with the Reserve Bank of India (RBI) refers to reporting the inflow of foreign investment in an Indian company to the RBI. This reporting is mandatory for Indian companies that receive foreign investments in equity shares, compulsorily convertible preference shares or debentures, and warrants or partly-paid shares. The reporting process involves submitting the Foreign Currency and General Permission Route (FCGPR) form and a Company Secretary (CS) certificate.
Purpose of FDI reporting with RBI
Applicable Regulation on FDI filing with RBI
The regulations applicable to Foreign Direct Investment (FDI) filing with the Reserve Bank of India (RBI) are primarily governed by the Foreign Exchange Management Act, 1999 (FEMA) and its regulations.
Foreign Direct Investment is an investment made by a foreign company or individual in an Indian company. FDI is a crucial component of India’s economic growth and development. It brings capital, technology, and expertise into the country, which can help improve the domestic economy and create jobs.
Conditions required for FDI
Routes of Foreign Direct Investment (FDI)
FDI is permitted fewer than two routes in various sectors:
Automatic Route: Under this route, non-resident or Indian companies can invest in a company without prior approval from RBI or the Government of India.
Government Route: Under this route, prior approval from the Government of India is required before investing in a company.
FIRMS Portal
FIRMS is made online in two phases. In the first phase, the first module, namely, Entity Master, was made available online. In the second phase, the second module is made available for the following reporting:
- Reporting Form FC-GPR – issuance of Indian company instruments to a non-Indian resident
- Form FC-TRS – transfer of financial instruments between a resident outside India and a resident of India
- Form LLP-I – FDI in LLP by donating large sums of money and dividends of ESOPs/equity shares/shares against the use of ESOP by an Indian company to an employee living outside India.
- Form CN – issuing or transfer of flexible notes
- Form DRR – issuing/transfer of deposit receipts
- Form DI – Reporting a downward investment (indirect foreign investment) to a company or LLP
- Form InVi – Investment reporting by a foreign resident of India in-vehicle Investment.
Reporting through FIRMS
FIRMS Portal is a 24*7 online platform for reporting foreign investment in India which provides a common platform for all reporting. Reporting through FIRMS was divided into two phases:
The first stage is creation of entity master form in which Indian entities are required to authorize one person through letter of authorization as per prescribed format given by RBI as per user manual for creation of entity master form. The authorized person is only authorized to update the data on the foreign investment.
The second stage is the creation of a business user, which allows the user to report foreign investment transactions received at a given time. Here the user saves different forms depending on his criteria like FCGPR, FCTRS, DI form etc. The effect of this report can be seen on the main entity.
What is an Entity User?
An Entity User is a person authorized by the business (company/LLP/startup) to register a business in the Entity Master of FIRMS application. The Business User will be the sole person authorized to add/update the foreign investment details of the Business Enterprise and will be solely responsible for the data included.
One business may only have one business user. One person can be a business user for more than one business. However, one should get the same different registrations as the registration is for the business.
Documents for entity form
The following documents need to be attached to create the main entity form:-
- In case of Indian entities (Company, LLP, etc.) Board resolution in favor of the beneficiary;
- PAN of the authorized person;
- Authorized letter in the prescribed format.
Procedure to create Entity Master
Following process is to be followed to create Entity Master:-
- Log on to https://firms.rbi.org.in
- Click on the Registration form for a new entity user
- A pop-up window will appear with the entity user registration form
- The user is now required to fill in the field description on the entity user form;
- Now the next step is to submit the said form to RBI where RBI will ensure and verify the details;
- After the user ID is created, a popup message will appear saying “Record saved successfully”.
- After the above procedure, the authorization letter is verified by RBI and if approved, the user will receive a password on their registered email address.
This password can be changed later by the user after successful login. In the event that the user does not receive any email notification of approval/rejection of the registration within the next 48 hours, he can contact the email.
An entity’s master unit is a master data reporting unit that shows the total foreign investment received by the entity during its lifetime.
What is a Business User?
The applicant reports on the transaction on the Single Master form to FIRMS. The BU may use its business information to authorize the reporting of operations. If a person wants to work as a BU in another organization, he or she must register individually. In addition, at the time of registration, BU must select the IFSC bank code that will authorize eKYC (defined under the heading “Registration of Business User”) and reporting will be done via SMF. If the IFSC details are changed i.e. BU wishes to submit a report to another branch or bank, the company is still the same, it needs to repeat the registration process for the Business user with the new IFSC code and get a separate Log.
Documents to create Business User
To create a Business User, you need to attach the following documents:-
- Authorization letter in the prescribed format;
- KYC of non-resident investor;
- Bank branch details
Procedure to create Business User
To create a business user the following procedure should be followed:-
- Log on to https://firms.rbi.org.in
- Click on the Registration form for business users
- Fill in the information in the displayed pop-up window with the registration form of a business user;
- After entering the complete details, click the Submit button. In case any error is shown, correct it and then click Submit button.
- After sending the documents, the message “Record saved successfully” will be displayed.
Then RBI through its authorized dealer bank checks the submitted documents and their approval or rejection is communicated through email.
Single Master Form (“SMF”)
The RBI introduced the SMF on 01/09/2018 and consolidated 9 reporting forms in one form, the RBI also released a user manual (“SMF Manual”) which clearly outlines the process for completing one main form (“SMF”). With the launch of SMF, ARF has been phased out as of September 1, 2018. Now, the user is required to submit an FDI report obtained from the FCGPR sub-category only.
SMF Reporting (provide one forum for different reporting types)
After obtaining a Business User Registration, a business was required to obtain a business user registration. To do this, you need to go to https://firms.rbi.org.in/firms/ and select the Business User Registration Form and fill in the required details and attach the letter of authority (the format of this book is provided in the SMF user manual). Please note that this registration may be used by an individual if a resident is required to report.
AD Banker is authorized to process such a Business User Request and therefore a person must contact the AD bank to which the report was made (by decision of IFSC or branch at the time of registration of the Business User).
FAQs
Q: What is FDI filing with RBI?
FDI filing with RBI refers to submitting information related to foreign direct investment (FDI) in India to the Reserve Bank of India (RBI) in a prescribed format.
Q: Who is required to file for FDI with RBI?
Indian companies receiving foreign investment or investing overseas must file for FDI with RBI.
Q: What is the format for FDI reporting to RBI?
The format for FDI reporting to RBI is specified in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 (FEMA 20).
Q: What is the timeline for FDI filing with RBI?
FDI filing with RBI must be done within 30 days of receiving foreign investment or making a foreign investment overseas.
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